Now more than ever, technology is influencing the way we do business, communicate, move through and around the world, access and manage our homes, receive and administer healthcare, make purchases, secure information, and protect our most valuable property. Morrison Foerster keeps pace with this rapidly evolving landscape across our internationally recognized corporate, finance, intellectual property, and litigation practices. MoFo Tech brings together our insights relating to fields such as blockchain and distributed ledger, cloud and as-a-service technologies, driverless cars, drones, fintech, computer hardware and software, the Internet of Things, semiconductors, and telecommunications. The MoFo Tech blog offers real-time, in-depth analyses of the trends and complex issues shaping the global technology industry.<h2>ABOUT MORRISON FOERSTER</h2>Morrison Foerster is a leading global law firm that transforms complexity into advantage for its clients. Our clients include some of the largest financial institutions, banks, consulting and accounting firms, and Fortune 100, technology, and life sciences companies. Highlighting the firm’s commitment to client service, leadership in market-changing deals and impact litigation, and values-based culture, Morrison Foerster has been repeatedly recognized as one of the top 10 firms on The American Lawyer’s A-List. Year after year, the firm receives significant recognition from Chambers and The Legal 500 across their various guides, including Global, USA, Asia‑Pacific, Europe, UK, Latin America, and FinTech Legal. Our lawyers passionately care about delivering legal excellence while living our values. Morrison Foerster has a long-standing commitment to creating a culture that respects and celebrates differences, while providing an inclusive environment. The firm has achieved Mansfield Certification Plus since 2018 as a result of successfully reaching at least 30 percent women, communities of color, and LGBTQ+ lawyer representation in a notable number of current leadership roles and committees. The firm also has a long history of commitment to the community and society through providing pro bono legal services, including litigating for civil rights and civil liberties, improving public education and fostering the wellbeing of children, advocating for veterans, promoting international human rights, enforcing the right to asylum, and safeguarding the environment.

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Scott Llewellyn’s practice focuses on complex litigation in federal and state courts around the country, with an emphasis on patent and trade secret disputes. Over the past decade, he has worked on some of the most significant, high–profile IP cases involving technology for televisions, smartphones, and self–driving cars, relying on 40 years of experience with computer hardware and software. Scott also has significant experience with business divorce cases before courts and arbitrators, involving a mix of trade secret, patent, tort, and contract claims relating to technology development and implementation.Scott also has successfully tried general commercial arbitration and agency matters, briefed and argued various appeals in federal appellate court, and tried more than 20 cases for the Denver City Attorney’s office, most of them jury trials.Scott also has an active pro bono practice, having worked on a variety of criminal and immigration appeals, and having represented Colorado criminal defense and mental health organizations in high–profile suits against the state of Colorado for violations of the constitutional rights of defendants.At MoFo, Scott serves on the board of the Morrison & Foerster Foundation. In the broader legal community, he serves on the boards of the Colorado Lawyers Committee and Drop in the Bucket (a charity that builds wells and sanitation systems in sub–Saharan Africa).After law school, Scott clerked for the Honorable Clarence A. Brimmer, District of Wyoming, and the Honorable Diarmuid F. O’Scannlain, Ninth Circuit. He was also previously an adjunct professor at the Georgetown University Law Center.

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Partner

Scott Llewellyn’s practice involves complex litigation before state and federal courts around the country, with an emphasis on patent and trade secret disputes for high-tech companies, to which he brings more than 35 years of experience with computer hardware and software, in particular relating to the processing and transmission of audio, video, voice, and other types of data. Mr. Llewellyn has also tried commercial arbitration and agency matters; briefed and argued various appeals in federal appellate court; and tried more than 20 cases for the Denver city attorney’s office, most of them jury trials.

Scott F. Llewellyn

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MoFo Tech brings together legal insights and in-depth analyses on trends and complex issues shaping the global technology industry, covering fields such as blockchain and distributed ledger, cloud and SaaS technologies, driverless cars, drones, FinTech, computer hardware and software, the IoT, semiconductors, and telecommunications.

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MoFo Tech brings together legal insights and in-depth analyses on trends and complex issues shaping the global technology industry, covering fields such as blockchain and distributed ledger, cloud and SaaS technologies, driverless cars, drones, FinTech, computer hardware and software, the IoT, semiconductors, and telecommunications.

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Current State of the AI VC Financing Market

MoFo Tech Law Summit – Tech and Antitrust: Policy Shifts in the Second Trump Administration

MoFo Tech Law Summit – Responsible Tech: Policy Becomes Practice

AI Dynamics: Regulatory Landscape and Industry Insights

Introducing the MoFo Tech Law Summit – Innovation Under Regulation

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On December 13, 2023, the IRS revealed a revamped leadership structure, introducing Chief Information Officer and Chief Operating Officer positions to leverage technology more effectively. The move aligns with IRS Commissioner Danny Werfel’s vision of employing AI and advanced analytics to streamline tax processes, facilitate communication, and optimize audits for both the IRS and taxpayers. This technological shift supports the IRS’s initiative to use AI in audit selection, addressing a decline in audits for high-income individuals, a strategy disclosed in a September 8, 2023 statement. The focus is on enhancing proficiency in detecting tax evasion, recognizing compliance threats, and refining case selection tools.The IRS has stated that audit rates for those earning less than $400,000 annually will remain unaffected. Additionally, AI safeguards will be implemented for Earned Income Tax Credit claims, aiming to prevent exploitation by unscrupulous tax preparers. The IRS’s plan involves expanding high-income and high-wealth compliance efforts, employing AI in initiatives like the High Wealth, High Balance Due Taxpayer Field Initiative. Specifically, the Large Partnership Compliance program, utilizing AI and machine learning, will scrutinize 75 of the largest U.S. partnerships, each possessing over $10 billion in assets, addressing historically limited examination coverage of such entities.

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Chair of the Tax Practice

Anthony J. Carbone is a partner in our New York office and chair of the Tax practice.

Anthony J. Carbone

Anthony J. Carbone is a partner in our New York office and co-chair of the Tax practice. He also serves as co-chair of the Federal Tax practice. His practice focuses on tax planning strategies and the tax consequences of a wide range of business, investment and capital markets transactions in the U.S. and internationally.

Anthony Carbone

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Associate

Kevin is a tax associate in the Boston office of Morrison Foerster.
Kevin advises clients on U.S. federal income tax considerations related to domestic and cross-border transactions that include mergers and acquisitions, debt and equity offerings, reorganizations, real estate investment trusts, capital markets transactions, structured products, and renewable energy.

Kevin Brown

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On December 13, 2023, the IRS revealed a revamped leadership structure, introducing Chief Information Officer and Chief Operating Officer positions to leverage technology more effectively. 

AI Trends For 2024 - IRS Adopts AI-Powered Audit Selection Tools, Hires Technology-Focused Leadership

Responsible AI isn’t just for BigTech. This coming year we can expect institutional, venture, and strategic investors to take an interest in whether and how well their funds and portfolio companies are identifying and managing the legal and ethical risks associated with their use of AI and, in particular, Generative AI. Similarly, the boards of companies will take an increased interest in these issues. As a result, these investors and board members will be hungry for tools that they can use to help them evaluate and then drive improvement in how their companies are addressing these concerns.AI raises many legal and ethical concerns, including accuracy, reliability, safety, privacy, security, fairness and bias, and sustainability. Responsible AI programs assess and mitigate these risks through solid governance practices and operational implementation.This past year, a number of AI industry standards launched that set forth the principal tenets of Responsible AI programs. We can expect in 2024 that implementation of these tenets will proliferate across sectors in both the public and private sectors.

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Stephanie assists companies with technology and life sciences transactions, representing both private and public companies, from emerging growth through the Fortune 50. In particular, Stephanie focuses on helping companies that leverage data through technology in structuring their business and commercial transactions.

Stephanie Sharron

Stephanie Sharron is partner in the Palo Alto office and a member of the firm’s Technology Transactions Group. Clients turn to Ms. Sharron for advice on how to leverage data through technology and the related issues that apply to their business models in light of the rapid changes in business, technology and law.

Stephanie Lynn Sharron

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AI Trends For 2022 - AI Industry Poised for Successful 2022

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Responsible AI isn’t just for BigTech. This coming year we can expect institutional, venture, and strategic investors to take an interest in whether and how well their funds and portfolio companies are identifying and managing the legal and ethical risks associated with their use of AI and, in particular, Generative AI. 

AI Trends For 2024 - Responsible AI isn't just for Big Tech

Generative artificial intelligence exploded into public consciousness in 2023.[1] With increased public awareness inevitably came increased regulatory scrutiny, both in the United States and abroad. While there is little doubt that government regulation of AI will increase in 2024, a different trend is also emerging – AI companies proactively embracing responsible AI principles through voluntary commitments. Some of what we’ve seen so far: <ul><li dir="ltr">White House Secured Voluntary Commitments from Leading AI Companies. In July 2023, seven companies at the forefront of AI innovation (Amazon, Anthropic, Google, Inflection, Meta, Microsoft, and OpenAI) voluntarily committed to a series of principles put forward by the Biden administration to foster safety, security, and trust in their AI-based products.[2] Since then, eight additional companies have signed on, including Adobe, Cohere, IBM, Nvidia, Palantir, Salesforce, Scale AI, and Stability. The commitments include security testing, information sharing, investing in cybersecurity, vulnerability auditing, content labeling, public reporting, researching risks, and using AI to address societal issues. [3]</li><li>White House Secured Voluntary Commitments in the Health Sector. On December 14, 2023, the White House announced voluntary commitments from 28 healthcare provider and payer organizations to health sector AI commitments.[4] The commitments include ensuring that outcomes are aligned with fair, appropriate, valid, effective, and safe (FAVES) AI principles, transparency in development and use, adherence to a risk management framework, and the responsible use of open source models.</li><li>Content Provenance. It is sometimes virtually impossible to tell when works (like photos) have been altered. While this was true before generative AI (think photoshopping), companies in the generative AI space have signed on to projects like the Coalition for Content Provenance and Authenticity (C2PA) to develop open technical standards for tracing content provenance. In October 2023, Adobe, in collaboration with the C2PA, launched Content Credentials, which allow creators to add tamper-evidence metadata about their content, including whether any AI tools were used.[5]</li><li>Watermarking. Related to the above (and the White House voluntary commitments), companies have also launched watermarking tools to label AI-generated content.[6] </li><li>Opt Out of Training. While maintaining that use of third-party materials to train their models is a fair use, leading AI companies nevertheless provided creators with ways to opt out of having their materials used as training data for forthcoming models.[7] </li></ul>[1]It is incredible to think how recently these tools were released. ChatGPT, arguably the tool that put generative AI on the map, was only launched in November 2022 (does anyone remember the prompt asking ChatGPT to write a biblical verse in the style of the King James Bible explaining how to remove a peanut butter sandwich from a VCR? That was <a href="https://twitter.com/tqbf/status/1598513757805858820?lang=en" target="_blank">tweeted</a> on December 1, 2022, and The New York Times <a href="https://www.nytimes.com/2022/12/05/technology/chatgpt-ai-twitter.html#:~:text=Many%20of%20the%20ChatGPT%20exchanges,butter%20sandwich%20from%20a%20VCR.%E2%80%9D" target="_blank">wrote about it </a>on December 5, 2022). One of the first text-to-image models, DALL·E, was <a href="https://openai.com/research/dall-e" target="_blank">announced in January 2021</a> while Stable Diffusion was released in August 2022, and Firefly in June 2023. The first publicly available text-to-video model, Runway Gen-2, was first released in <a href="https://petapixel.com/2023/03/20/runway-gen-2-is-the-first-publicly-available-text-to-video-generator/" target="_blank">March 2023</a>.[2] The White House, “<a href="https://www.whitehouse.gov/briefing-room/statements-releases/2023/07/21/fact-sheet-biden-harris-administration-secures-voluntary-commitments-from-leading-artificial-intelligence-companies-to-manage-the-risks-posed-by-ai/" target="_blank">FACT SHEET: Biden-⁠Harris Administration Secures Voluntary Commitments from Leading Artificial Intelligence Companies to Manage the Risks Posed by AI</a>,” The White House Briefing Room (July 21, 2023).[3] Brad Smith, “<a href="https://blogs.microsoft.com/on-the-issues/2023/07/21/commitment-safe-secure-ai/" target="_blank">Our commitments to advance safe, secure, and trustworthy AI</a>,” Microsoft (July 21, 2023); Amazon Staff, “<a href="https://www.aboutamazon.com/news/company-news/amazon-responsible-ai" target="_blank">Our commitment to the responsible use of AI</a>,” Amazon Blog (July 21, 2023).[4] U.S. Department of Health and Human Services, “<a href="https://www.hhs.gov/about/news/2023/12/14/fact-sheet-biden-harris-administration-announces-voluntary-commitments-leading-healthcare-companies-harness-potential-manage-risks-posed-ai.html" target="_blank">FACT SHEET: Biden-Harris Administration Announces Voluntary Commitments from Leading Healthcare Companies to Harness the Potential and Manage the Risks Posed by AI</a>,” U.S. Department of Health and Human Services News (Dec. 14, 2023).[5] Adobe, “What are Content Credentials?” Adobe Blog (Oct. 10, 2023).[6] See, e.g., Melissa Heikkila, “<a href="https://www.technologyreview.com/2023/08/29/1078620/google-deepmind-has-launched-a-watermarking-tool-for-ai-generated-images/" target="_blank">Google DeepMind has launched a watermarking tool for AI-generated images</a>,” MIT Technology Review (Aug. 29, 2023); Meta, “Stable Signature: A new method for watermarking images created by open source generative AI,” Meta Blog (Oct. 6, 2023); Emilia David, “<a href="https://www.theverge.com/2023/11/29/23980697/amazon-ai-image-model-watermark-copyright" target="_blank">Amazon joins AI image creation fray with new model</a>,” The Verge (Nov. 29, 2023); Emilia David, “<a href="https://www.theverge.com/2023/11/8/23951955/microsoft-elections-generative-ai-content-watermarks" target="_blank">Microsoft offers politicians protection against deepfakes</a>,” The Verge (Nov. 8, 2023).[7] See, e.g., Emilia David, “<a href="https://www.theverge.com/2023/8/7/23823046/openai-data-scrape-block-ai" target="_blank">Now you can block OpenAI’s web crawler</a>,” The Verge (Aug. 7, 2023); Danielle Romain, “<a href="https://blog.google/technology/ai/an-update-on-web-publisher-controls/" target="_blank">An update on web publisher controls</a>,” Google Blog (Sept. 28, 2023); Sharon Goldman, “<a href="https://venturebeat.com/ai/stability-ai-to-honor-artist-opt-out-requests-for-stable-diffusion-3/" target="_blank">Artists can opt-out of next Stable Diffusion training</a>,” Venture Beat (Dec. 15, 2022).

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Daphne Higgs is a partner in the Palo Alto office of Morrison Foerster and a member of the firm’s Technology Transactions Group.

Daphne Higgs

Daphne Higgs is a partner in the Palo Alto office of Morrison Foerster and a member of the firm’s Technology Transactions Group.

Daphne M Higgs

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Lindsay is an associate in the Technology Transactions Group of Morrison Foerster.

Lindsay B. Harris

Lindsay Harris

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In the Public Eye: USPTO Issues Report on AI

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Generative artificial intelligence exploded into public consciousness in 2023.  With increased public awareness inevitably came increased regulatory scrutiny, both in the United States and abroad. While there is little doubt that government regulation of AI will increase in 2024, a different trend is also emerging – AI companies proactively embracing responsible AI principles through voluntary commitments. 

AI Trends For 2024 - Voluntary Commitments by Companies to Responsible AI

Vendor procurement practices will continue to evolve in 2024 to reflect corporate AI risk management and governance policies. While companies are beginning to appreciate that vendor work product may be developed using AI tools unless their contracts specify otherwise, they have not fully appreciated what that means for their businesses.If, for example, an organization is hiring a service provider to produce a work of authorship, and the organization values the ability to preclude others from copying, distributing, publicly performing, or creating new works based on the vendor’s work, then the organization may want to consider building clear guidelines into the service provider’s contract for whether and how generative AI tools may be used. This is advisable because, at least as of now in the United States, the Copyright Office has made it clear that there are some substantial hurdles to obtaining copyright protection for generative AI output. Software is a work of authorship under the Copyright Act, so this applies not only to the use of generative AI to create artwork or reports but also to the use of generative AI for software development.Beyond intellectual property rights issues, vendor use of generative AI can also present challenges with respect to the accuracy, reliability, or biases in the output, as well as risks to confidentiality, data privacy, security, and safety. Different use cases offer different benefits and raise different concerns (and in some cases, little to no concern at all). As the use of AI in the enterprise grows, it is more important than ever to evaluate risks in light of the use case and develop procurement practices and contract terms that map to those risks.

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AI Trends For 2022 - Export Control/CFIUS

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Vendor procurement practices will continue to evolve in 2024 to reflect corporate AI risk management and governance policies. While companies are beginning to appreciate that vendor work product may be developed using AI tools unless their contracts specify otherwise, they have not fully appreciated what that means for their businesses.

AI Trends For 2024 - Vendor Procurement Practices and Generative AI

Courts are increasingly being asked: is AI a product or a service? AI companies currently operate within an undefined products liability space. As companies continue to innovate with AI, courts must grapple with complicated questions in cases involving AI technologies.Traditional product liability cases involve plaintiffs claiming an injury arising from a defective physical product. Purely software offerings, by contrast, are typically deemed “services” not subject to products liability. Like software, the “product” in AI cases is intangible—a software program, an autonomous system, or a decision-making algorithm.So where does AI fall on the spectrum between products and services?Courts have not reached a consensus.Companies are likely to face inconsistent results as courts around the country contend with these distinctions. MoFo continues to monitor these cases and provide updates to support companies navigating the growing pains inherent in emerging industries.

Fertility Center Litigation

Fitbit

MicroPort

Leading Healthcare, Pharmaceutical, and Medical Device Company

Lethal Injection Matters – Major Pharmaceutical Company

Pain Pump Matters – Large Pharmaceutical Company

Major Technology Company

Leading Chemical Company

Security Device Company

In re Air Crash Near Peixoto de Azevedo, Brazil

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Erin Bosman is chair of MoFo’s Class Actions and Mass Torts Practice Group and is a founder and co-head of the Artificial Intelligence Group. Clients value her business strategy, seeking her comprehensive counsel throughout the product life cycle, especially in high-stakes litigation and product recalls.

Erin M. Bosman

Erin Bosman is chair of MoFo’s Class Actions and Mass Torts Practice Group and is a founder and co-head of the Artificial Intelligence Group. Clients value her business strategy, seeking her comprehensive counsel throughout the product life cycle, especially in high-stakes litigation and product recalls.

Erin Bosman

An orthopedic implant company

A children&rsquo;s monthly subscription service product

A fertility company

A major technology company

A smart fitness equipment company

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Julie Park provides analytic and strategic counsel for issues in product life cycle, product liability and defective products, consumer class actions, and more.

Julie Park

Julie Park | Product Liability Lawyer

Julie Park protects her clients’ products no matter what kind of product issue they face—whether it is planning for new product development, recalling an existing product, or defending clients against product liability or consumer class actions. Drawing on her deep technical and legal expertise, Julie counsels clients on consumer product safety regulation and pharmaceutical and medical device preemption while also managing complex and multijurisdictional litigation both in state and federal court.

Julie Y. Park

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Ashley E. Quinn is an associate in Morrison Foerster’s Class Actions + Mass Torts Group in the San Diego office. Ashley’s practice spans the product lifecycle. She defends clients in class actions, multidistrict, and other high-stakes litigation in state and federal court. 

Ashley E. Quinn

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Supreme Court Restricts the Extraterritorial Reach of U.S. Patent Law for Exported Goods

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Courts are increasingly being asked: is AI a product or a service? AI companies currently operate within an undefined products liability space. As companies continue to innovate with AI, courts must grapple with complicated questions in cases involving AI technologies.

AI Trends For 2024 - AI: Product or Service? Product Liability in the Age of AI

U.S. state legislatures will continue integrating requirements for profiling and automated decision-making into consumer privacy laws, reflecting the growing impact and influence of AI. All comprehensive state consumer privacy laws that are currently in effect (California, Colorado, Connecticut, and Virginia) and almost all of those entering effect over the next few years (Delaware, Indiana, Montana, Oregon, Tennessee, Texas, and Utah) include concepts of automated decision-making and profiling and place restrictions on such activities.While definitions differ slightly across the U.S. state privacy laws, profiling generally refers to the evaluation of individuals’ personal aspects via the automated processing of their personal information. Most states require covered entities to offer an opt-out from profiling, and most require a data protection assessment for activities posing a “heightened risk of harm” to individuals, such as targeted advertising.California is leading these efforts by creating an independent watchdog, the California Privacy Protection Agency (CPPA), tasked with, inter alia, regulating the use of automated decision-making technology (ADMT). ADMT refers to any system, software, or process that processes personal information and uses computation to make decisions or facilitate human decision-making, including profiling. The CPPA <a href="https://cppa.ca.gov/announcements/2023/20231127.html" target="_blank">recently proposed</a> draft regulations that would require businesses to follow specific notice, opt-out, and access rules regarding their use of ADMT. These landmark regulations are expected to set the stage for other states’ enforcement of ADMT and profiling restrictions.Carson Martinez contributed to authoring this blog post.

AI Trends For 2024 - U.S. State Consumer Privacy Laws’ Focus on Automated Decision-Making and Profiling

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Of Counsel

Marijn Storm